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CMS Proposes New Bundled Payment Model for Radiation Oncology

The Centers for Medicare & Medicaid Services (CMS) has proposed a new payment model for radiation oncology.

The proposed radiation oncology (RO) model would establish a 90-day episode of care for 17 disease sites. It wold replace the current fee-for-service model of Medicare reimbursement for radiotherapy services.

The overall objective is to improve the quality of care for cancer patients who receive radiotherapy as well as simplify the current payment system. The new approach could go into effect as early as January 1, 2020.

The proposed model will evaluate whether “site neutral” bundled payments — made to physician group practices, hospital outpatient departments, and freestanding radiation centers and that cover treatment over a 90-day episode — can reduce Medicare costs while improving quality of care.

CMS estimates savings of $250 to $260 million (3%) over the model’s 5-year implementation period. They say that this type of episodic payment is designed to give radiation oncologists greater predictability in payment and greater opportunity to clinically manage episodes of care in comparison with traditional fee-for-service payment incentives.

The model would be mandatory in certain parts of the country. CMS believes this approach will provide more complete evidence of the impact of the model.

Radiation Oncology Groups Weigh In

Following the announcement, organizations responded with praise but also some concerns.

The American Society for Radiation Oncology (ASTRO) said that it is analyzing the proposed model, but “it will take several weeks before we have a clear picture of how the new structure and rollout will impact the nation’s 4500 radiation oncologists and the roughly one million patients they treat with radiation therapy each year.”

Dave Adler, vice-president of advocacy for ASTRO, told Medscape Medical News that the proposed model is an encouraging step forward in modernizing how radiation oncology care is compensated under Medicare and in improving outcomes for cancer patients.

An advanced alternative payment model (APM) for radiation oncology also “would replace an outdated fee-for-service payment structure with one that is based on quality and value, and the RO-APM has the potential to stabilize reimbursement in the long term,” he noted.

However, he pointed out that there are “areas where we have concern…and we are committed to working constructively with CMS and Congress to improve the model before its implementation.”

The chief worry is whether small practices would be able to marshal the necessary resources required to comply with the model successfully, explained Adler.

“We have invited feedback from the ASTRO membership to understand whether this or other impediments might render it impossible for some practices to adjust to all of the changes in a short time frame if there is a mandate to participate as early as January 1, 2020,” Adler said.

He added that they are inclined to think that a smaller-scale “pilot” phase-in might be more appropriate to identify unanticipated operational challenges prior to widespread mandatory participation.

“Perhaps a rolling start with a gradually expanding number of participating practices would allow incremental improvements in real time as the clinical and administrative aspects become better understood in a practical sense,” he ventured. “Based on member feedback, we will expand on these and other areas of concern and suggested solutions in our comments to CMS due in early September.”

The Community Oncology Alliance (COA) issued a statement expressing concern that the model would be mandatory. It noted that it has “deep reservations and fundamental opposition to a proposed mandatory or ‘required’ CMMI [CMS Innovation Center] model.

“While the proposed CMMI model does include a much-needed policy proposal to implement site-neutral payments, COA absolutely does not support mandatory CMMI models,” COA stated.

In addition, COA pointed out that mandatory CMMI models are not in the charter of CMMI as written into law by Congress, and therefore the proposed model “violates the charter of CMMI as given to it by Congress.”

Three Reasons for Reform

CMS has been investigating potential ways to test an episode-based payment model for radiotherapy since 2014. When Congress enacted the Patient Access and Medicare Protection Act in 2015, the Secretary of Health and Human Services was required to submit to Congress a report on “the development of an episodic alternative payment model” for radiotherapy services.

The report identified three key reasons why the current model for radiotherapy was in need of reformed.

First was the lack of site neutrality for payments. Under the current system, reimbursement varies according to the type of facility. Radiotherapy delivered in a freestanding radiotherapy center is reimbursed under a different payment system than services administered in the outpatient department of a hospital, for example. Thus, the same treatment is reimbursed at different rates. This could incentivize Medicare providers and suppliers to choose one setting over another.

Second, incentives encourage volume over value. Facilities and physicians are often paid for each treatment delivered, which means that the more services they provide, the more claims they can submit to Medicare for payment. This type of incentive is not always consonant with what is clinically appropriate for the patient.

Third, there are coding and payment challenges. CMS has acknowledged that there are difficulties in coding and setting payment rates appropriately for radiotherapy. For example, changes have led to reduced payment and “coding complexity” across their payment systems. Additionally, the Patient Access and Medicare Protection Act froze payment rates for certain services.

Details of Proposed Model

Overall, CMS would make prospective, episode-based or bundled payments that would cover radiotherapy services delivered in a 90-day episode for the 17 cancer types that meet the included cancer type criteria. The model would transition to site-neutral payment by establishing a common, adjusted national base payment amount for the episode, regardless of where the treatment is delivered.

Payments would be divided into two parts: a professional component to cover services that are provided only by a physician, and a technical component that would cover other types of services, including the provision of equipment, supplies, personnel, and related costs.

The new model would also link payment to quality, using reporting and performance measures, clinical data reporting, and patient experience as factors when determining payment to participants.

Specific payment amounts for each participant would be determined on the basis of several factors, including national base rates, trend factors, and adjustments for the case-mix, historical experience, and geographic location.

Payments would be further adjusted by a “discount factor.” This set percentage, by which CMS reduces an episode payment amount, would reserve savings for Medicare and reduce beneficiary cost sharing. The discount factor would be 4% for the professional component and 5% for the technical component. Payment would be adjusted for episodes of care that were not completed.

Medicare beneficiaries would still be responsible for the same cost sharing (generally 20%) as under the traditional payment systems, but because of the discounts that would be applied, patients may end up having lower out-of-pocket expenses.

CMS concluded: “We would monitor RO model to guard against any unintended consequences that might negatively impact beneficiaries.”

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